Recast of the Brussels regulation - what do it mean for you?

The Brussels Regulation (“the original Regulation”) which deals with jurisdiction and the recognition and enforcement of judgments on civil and commercial matters will be replaced as from 10 January 2015 with a revised Brussels Regulation (“the recast Regulation”).

The recast Regulation will apply to legal proceedings instituted on or after 10 January 2015 when the existing Regulation will be repealed, except that it will continue to apply to judgments given in proceedings instituted before 10 January 2015. 

Whilst much of the Original Regulation remains unchanged, there are some significant amendments, particularly for commercial parties. 

Article 23 of the original Regulation provided that at least 1 party had to be EU domiciled for the Regulation to apply but in the recast Regulation under Article 25, it states that where there is a jurisdiction agreement in favour of a member state court, then the recast Regulation will apply whether or not any party to that agreement is EU domiciled. Therefore, the procedure for bringing proceedings will become easier so that if, for example, the jurisdiction agreement between the parties provides that the English courts shall have jurisdiction, then the claimant will no longer need the English Court’s permission to serve out of the jurisdiction regardless of where any of the parties to the agreement are domiciled. This will streamline the procedure and make it more cost effective to commence proceedings as there will be no requirement after 10 January 2015 to make an application for permission to serve with witness statement in support. 

The recast Regulation also contains a new rule and new recital regarding the governing law to be applied to consider the validity of a jurisdiction clause. Article 25(1) provides that the question as to whether a jurisdiction agreement is null and void will be determined under the law of the member state identified in the jurisdiction agreement. Furthermore, the new Article 25(5) provides that “an agreement conferring jurisdiction which forms part of the contract shall be treated as an agreement independent of the other terms of the contract” and so even if a claim is made that the contract is invalid, the courts and the parties can be clear as to which courts will resolve this dispute i.e. the courts of the member state specified in the contract.  

The recast Regulation also amends the rules in relation to the rule of the court “first seized” i.e. where proceedings were commenced first. Under the original Regulation priority was given to the court first seized and so proceedings were often issued hastily in the court where a party would prefer the case to be brought regardless of any jurisdiction clause and often led to parties issuing proceedings in different member state courts hoping to be the one to commence proceedings first. The recast recognises the need to enhance the effectiveness of choice of law clauses within contracts in order to try and prevent a party from bringing proceedings in bad faith in a non-chosen member-state with the aim of delaying matters. As a result, the recast Regulation provides for an exception to the “first seized” rule where there is an exclusive jurisdiction clause in favour of a member state court and proceedings have been commenced in that court. In those circumstances the chosen court has priority regardless of which court was first seized. Accordingly, Article 31(2) provides that any other member state court must stay its proceedings unless and until the chosen court has declared it has no jurisdiction under the agreement. 

Another important amendment which will speed up the process and save on costs is in relation to the enforcement of a judgment of an EU member state. The recast Regulation has dispensed with the process of exequatur where before a judgment of an EU member state could be enforced in another member state it first had to be declared enforceable and registered in the member state of enforcement. This exequatur process within the original Regulation was considered to be unnecessary and time consuming and an obstacle to the enforcement process of judgments within the EU. The recast Regulation will bring in a simplified mechanism for the recognition and enforcement of judgments of EU member states whereby a Claimant will simply need to file a copy of the judgment and a standard form certificate and then can commence enforcement action. The recast Regulation even provides that if the judgment being enforced contains measures which are not known in the member state of enforcement, the enforcing court can adapt them to a measure which is known. There do, however, remain safeguards for judgment debtors and as such Articles 45 & 46 of the recast Regulation a judgment debtor is still able to apply for enforcement to be refused but still on the same limited grounds as before. 

The recast Regulation also makes the position clear as to arbitration and provides that there is an absolute exclusion of arbitration from its scope and so any member court can examine the validity of an arbitration agreement or refer parties to arbitration without having to wait for the decision of another member state court. 

The key changes as a result of the recast Regulation are, therefore, the disposal of the domicile requirement for parties to a jurisdiction clause even if none of the parties are domiciled in an EU member state; the protection of arbitration agreements; the strengthening of choice of court agreements; and the abolishment of the exequatur process.